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Saturday, February 17, 2018

Poroshenko assets can be sold at a huge discount

Poroshenko finally starts to sell their property

August 22, 2014 at 16:21

Text: Olga Samofalova


Three months it took the President of Ukraine Petro Poroshenko only in order to decide who will look for buyers for its business assets. Although he promised “immediately after the election.” The sale of assets, he might stretch at all for years – and all because the moment his giant business Empire can only be sold with a huge discount.

The President of Ukraine Petro Poroshenko finally starts selling its assets, hired to find buyers for investment company Rothschild. This was told by Giovanni Salvetti, managing Director and co-Chairman of the company. “We got on Thursday is very good news and pleased that we have been chosen for this important work”, – quotes the words of Salvetti radio “Liberty Ukraine”.

Interestingly, the Ukrainian partner of Rothschild in the process of finding buyers and the sale of Poroshenko’s business will be the company “Investment capital Ukraine”, which literally before June 20, had been in joint possession and under the guidance of Valeria Gontareva, the current head of the national Bank. For this position Gontareva recommended Poroshenko. Gontareva has created and has headed the company in 2007, but the next day after the appointment of the national Bank resigned from the Board of Directors and sold his shares in the investment company.

According to Him, the immediate work will begin next week, although Poroshenko has promised to hire a company and begin to get rid of all your business assets “immediately after the election.”

Perhaps Poroshenko did not spring to hurry with the sale, fearing the need to say goodbye to their businesses with huge discount. The calculation apparently was that he would be able to restore order in the country. However, to bring the situation under control, he clearly failed. Now to sell the Ukrainian business is still more profitable than in may. But to pull it would be imprudent from the point of view of loyalty of the Ukrainian electorate, who always disliked the oligarchs. In practice, however, the sale of the Empire Poroshenko can take a long time.

The business Empire of oligarch and the President of Ukraine

Poroshenko is ranked seventh in the list of the richest people of Ukraine according to Forbes magazine. On June 1, 2014, his fortune was estimated at $ 1.3 billion. For the last time is already significantly worn out: in early 2013, it was estimated at $ 1.6 billion.

The greatest weight in the ownership Poroshenko is a confectionery Corporation Roshen, which is included into the twenty of the largest confectionery companies in the world, and the company “Ukrprominvest-agro”, which owns more than 100 hectares of land in Ukraine.

The group Roshen is composed of four Ukrainian factories (Kiev, Vinnitsa, Mariupol and Kremenchug), one in Russia (Lipetsk confectionery factory), Lithuania (Klaipeda confectionery factory) and in Hungary (Bonbonetti Choco Kft.). Roshen belongs also maslomolochny plant”, Bershadmoloko” in Vinnytsia region. Roshen produces about 200 kinds of confectionery products and in General produces even more than 19 factories of the Russian holding “United confectioners” (450 thousand tons to 350 thousand tons).

The company “Ukrprominvest-agro group “Agroprodinvest”, “dawn skirts”, “Agrofirma Dneproagromash”, “Mas-agro” and others. Plus Poroshenko produces starch in Dnepropetrovsk on two plants and sells it through “Association “Krakhmalprodukt”.

Poroshenko owns several car and bus plants, in particular the Lutsk automobile plant. He owned the car company “Bogdan”, but he managed to sell last year because of debts. However Poroshenko, apparently, remained share in “Bogdan motors” because of the action belong not only to Fund “Owl” Oleg Svinarchuk, the owner of “Bogdan” and “Prime assets”, the capital of which is owned by Poroshenko.

Poroshenko fully or in partnership has some financial and industrial enterprises. In particular, the “International investbanka”, insurance company “Krajina”, shipyard “Lenin’s smithy” (Kiev), the Peskovsky glassware factory (Kyiv), a battery plant “Energoavtomatika” (Dnepropetrovsk). Finally, Poroshenko at a large media business: “the Fifth channel”, TV company TRT and four radio stations.

First loss

Some assets Poroshenko has actually lost. He owns Sevastopol marine plant will soon become a Russian company, which will operate in the interests of the city, recently assured the Governor of Sevastopol Sergey meniailo.

Second, at the beginning of the year was closed Roshen confectionery factory in Mariupol due to the loss of the Russian market. Last year, Russia banned the import of chocolates the company into its territory for reasons of security (in chocolate Roshen was discovered benzpyrene).

In the may banned in Russia products of Ukrainian factories filled the shelves of stores in Latvia, what was very unhappy with the Chairman of the Latvian chocolate factory Laima Roland Gulbis: “the European Union has decided to help Ukraine administrative way and given the opportunity to cheap Ukrainian product to arrive in Latvia. I don’t think this is possible somewhere in Berlin”.

Russian business Roshen also failed. This year the Tver district court of Moscow filed a case against the group and arrested 2.8 billion in the accounts of the company in Russia. At the end of March Roshen had to stop production in Russia. However, in April, the company resumed work.

Who and how many will buy?

Ukrainian businessmen will simply not afford to buy the entire confectionery group Roshen, which in the spring was estimated by experts in 1-1,3 billion. In the world rating Candy Indusrty Top 100 2014 Roshen took 20th place with a net sales 1,021 billion. Therefore, most likely, the company will sell parts. However, the Russian holding “United confectioners” in may claimed that he was not interested in buying Russian factory Roshen Poroshenko. However, the low price may force the Russian company to reconsider.

At the Russian plant in Lipetsk and other foreign plants may even be non-core investors. At least, if you discount the chances available. But the Ukrainian confectionery factories will be extremely difficult to find investors, even offering a substantial discount.

Western business started in the spring to leave the Ukrainian market. Russian business is also unlikely to venture. The same LUKOIL sells all of its 240 filling stations and six tank farms in Ukraine.

Revenues from agribusiness Poroshenko is significantly lower than the candy. So, “Agroprodinvest” in 2012 rescued 276 million hryvnia, or about $ 35 million; the company “Podillya”, which owns three sugar mills – 570 million ($71 million); Dneprovsky starch and syrup plant – 465 million ($58 million). These three companies can cost about $ 100 million.

However, in the current political and economic situation in the country, Poroshenko will have to restrain their appetites.

“Naturally, in order to Poroshenko was able to find a buyer for confectionery holding now, need discount, the value of which will depend on demand. But even by conservative estimates it could be about 35-40%. In any case, the deal promises to be the best,” – said the head of the analytical Department of the FC AForex Artem Deev.

The discount could be larger – up to 60-65% of pre-crisis assessed value, if the sale of assets will go through a quick scenario, says Lyudmila Matyukhina, Director of “JPA International Audit-Garant”.

“Even if the operating results of companies fell not so much, the buyer will be laying the political and economic risks. The likelihood that anyone will quickly find, even given such a large discount, from our point of view, is extremely low,” – said Matyukhin. Deev does not exclude that a potential buyer of Ukrainian assets Roshen could be the Norwegian company Orkla, which has long been spetsializiruyutsya on buying distressed assets.

There is one trick

However, experts doubt that Poroshenko will make his campaign promise. Only the choice of investment, which will look for the buyers, it took him three months. And sale of assets it can stretch on for years, under the guise of including “adverse market conditions”.

“From a political point of view, the President should certainly quickly go out of business to avoid conflict of interest, as a debt to the state a priori should be above business interests, but what can you expect from Poroshenko? At the moment it is not entirely clear how quickly Poroshenko plans to realize its assets and whether he is ready for deals in a very adverse economic situation. In practice, businesses can prepare to sell within a few years, when the owner is not in a hurry and want to get the maximum price for the asset,” says Lyudmila Matyukhina.

Not possible that Poroshenko will try to find a temporary replacement for himself as a businessman. Sham sale of assets in the case of the first person of the state, which is one of his top priorities puts integration with the EU, of course, is hardly possible, says Matyukhin. At least such a risk, the common man is unlikely to be resolved.

“But it may well be that Poroshenko will look for some strategic partners, which is now possible to sell the business of large parts or even whole (confectionery, dairy) to maintain a warm relationship and later will probably return to it in one way or another. The former business does not happen”, – says senior analyst “Alpari” Anna Bodrov.


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